Exxon Gets A Nod From The High Court

Justice David SouterWhat An Ass-in-nine decision.Image via Wikipedia

The US Supreme Court gave Exxon another 2 billion dollars today. By a 5-3 vote, they decided to overturn the overturned ruling which itself was an overturned ruling of the original amount awarded by a federal jury in Alaska. I know that’s hard to read, and harder to understand. Let me clarify.

In 1989 the supertanker Valdez ran aground in the Prince William Sound, Alaska. The captain was admittedly drunk when the catastrophe occurred. Roughly 11 million gallons of oil was spilled, spreading to cover about 1200 miles of coastline. To give you a rough idea, thats about how far it is to drive from Miami to New York. That’s alot of coastline.

In 1994, a federal jury awarded $5 billion in punitive damages. After that, a federal judge reduced the amount to $4.5 billion, and after that an appeals court reduced the amount to $2.5 billion, just half the original amount. Since then, Exxon appealed to the Supreme Court, which today reduced the punitive damages to $507.5 million, the amount they said equaled ‘compensatory’ damages. This amount will now be shared between the roughly 33,000 people and organizations affected by the disaster.

From the article at Reuters:

In the majority opinion, Justice David Souter concluded the $2.5 billion in punitive damages was excessive under federal maritime law, and should be cut to the amount of actual harm.

Hundreds of thousands of birds and thousands of marine animals were killed due to the oil spill. Fisheries were closed, some never to re-open. In the words of Tim Joyce, mayor of Cordova (where much of the fishing fleet is located): ‘Instead of taking a large corporation to the woodshed, they just gave them a slap on the wrist… A lot of people had their whole lives ruined because of this.’

Supreme Court Farts In Our General Direction

Exxon Mobil, arguably the largest company in the US, had argued that punitive damages were not only excessive, but unwarranted due to the federal clean water laws. Even though the high court verbally disagreed with that argument, they ruled that the punitive damages were too large, and based the award on compensation rather than punishment. Having read the decision, I can only say that once again our government speaks from every orifice it possesses, including the one that is usually reserved for excreting waste material from our bodies.

Assuming that each of the roughly 33,000 recipients gets an equal amount, the award amounts to about $15,000 each. Though it was not explicitly stated in the decision, the compensatory damages to the wildlife which used to abound in the Sound was determined to be zero. The compensatory damages to the coastline was determined to be zero. Only humans and human organizations had any value at all in the high court’s ruling. And as you can see from the amount, humans didn’t count for much.

Exxon profits are up 17% in the 1st quarter of 2008.
So it will take just under 10 hours to pay it off.

Exxon already has a well-deserved bad reputation. Their profits last year soared to an astounding record of over $40 billion. (When the talking heads on TV try to tell you that ‘speculation’ or ‘OPEC’ is the reason for high gas prices, remember to follow the money. Follow it all the way to Exxon.)

And Now, For Something Completely Sane

The 3 justices who seemed to actually bend in favor of Justice would have upheld the $2.5 billion award. Justices Ginsburg and Stevens believe that the US Congress should set the limits by law and the courts should simply interpret those laws. Justice Breyer, however, pulled no punches. Quoting Breyer, from the dissenting view(warning – big PDF file):

“The jury could reasonably have believed that Exxon knowingly allowed a relapsed alcoholic repeatedly to pilot a vessel filled with millions of gallons of oil through waters that provided the livelihood for the many plaintiffs in this case. Given that conduct, it was only a matter of time before a crash and spill like this occurred. And as JUSTICE GINSBURG points out, the damage easily could have been much worse.

The jury thought that the facts here justified punitive damages of $5 billion. … The District Court agreed. It “engaged in an exacting review” of that award “not once or twice, but three times, with a more penetrating inquiry each time,” the case having twice been remanded for reconsideration in light of Supreme Court due process cases that the District Court had not previously had a chance to consider…

… And each time it concluded “that a $5 billion award was justified by the facts of this case,” based in large part on the fact that “Exxon’s conduct was highly reprehensible,” and it reduced the award (slightly) only when the Court of Appeals specifically demanded that it do so. … When the Court of Appeals finally took matters into its own hands, it concluded that the facts justified an award of $2.5 billion. ….

It specifically noted the “egregious” nature of Exxon’s conduct…. And, apparently for that reason, it believed that the facts of the case “justifie[d] a considerably higher ratio” than the 1:1 ratio we had applied in our most recent due process case and that the Court adopts here… I can find no reasoned basis to disagree with the Court of Appeals’ conclusion that this is a special case, justifying an exception from strict application of the majority’s numerical rule.”

And that is exactly why the original award was so high. The original federal court found it reasonable to believe that Exxon was aware of the captain’s alcoholism and did nothing to prevent this highly likely accident. The Valdez accident is the largest single oil spill ever in the USA. It could have been prevented. The original federal court found that Exxon was culpable due to ‘reprehensible’ negligence, both before and after the accident. The punitive damages were awarded based on that finding, as a punishment as well as a deterrant against any future corporate irresponsibility.

Now the stoned high court has playfully patted Exxon on its big fat bottom and sent it home to its usual games. Corporate responsibility is just a thing you might read about in textbooks, but it surely isn’t required, expected or rewarded in this country. And governmental integrity?

Forget about it.

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